Rethinking Approaches to Service Innovation

Rethinking Approaches to Service Innovation

(or, when 2*3=5)

Ian Miles, August 2016

Around the turn of the century, as researchers began to turn their attention to service innovation, two influential commentaries suggested that there were three distinct approaches being pursued in much of the literature that was generated. Gallouj and Weinstein (1997) contrasted (1) a technologist approach with (2) a service-oriented approach. The former considers innovation only in terms of the adoption and use of technology. New Information Technology is prominent, and service innovation is seen in terms of the frameworks and concepts used when discussing manufacturing/goods innovation. The latter approach stresses the distinctiveness of services and service activities and the innovation that they can involve, Frameworks that can take into account these need to be applied. Coombs and Miles (2000) contrasted (1) an assimilationist approach with (2) a demarcationist approach. In their account, assimilation treats service innovation - whether technology-focused or not, as being largely encompassed using the frameworks and concepts used when discussing manufacturing/goods innovation; a perspective often advanced by economists and statisticians. The second approach again stresses the peculiar features of service activities, and the need for frameworks that take into account the specificities of service products and processes, and was more prominent in marketing and management case studies.

Both sets of authors thus depict the bulk of the literature emerging in the twentieth century as falling into one of two contrasting camps. And both suggest that we ideally require a new, (3) synthetist or integrated approach, which enables us to grasp the multiple forms that innovation and service innovation can take. The similarity of the two accounts has led many commentators - most of whom endorse the synthesis/integration ideal - to treat them as identical. However, Droege et al (2009), when comparing these two accounts, concluded that their identification of technologist and assimilationist approaches imply rather different things. (In contrast, demarcation and service-orientation are described in very similar ways.) They suggested that the earlier literature could be then be seen in terms of three, rather than two contrasting approaches.

In an essay published in 2016 (miles, 2016) I have argued, in contrast, that the different approaches taken in the literature can better be described in terms of two (roughly) orthogonal dimensions. Dimension one refers to the amount to which stress is placed on technological innovation versus other forms of innovation: the techno- versus servo- approaches. Dimension two refers to the extent to which stress is placed on service activities' and industries' similarities versus differences compared to goods and manufacturing. These two dimensions can be combined to give four quadrants reflecting four distinct approaches, as in the Figure below.

Two Dimensions of Debate

Stress on Technological elements of Innovation
Stress on Similarities between Sectors or Activities / Stress on Differences between Sectors or Activities
Stress on Non-Technological elements of Innovation

One advantage of this classification system is that it allows us to see the Reverse Product Cycle approach developed by Barras (1986, 1990) as a techno-demarcationist approach - one that stresses technological innovation, but sees it as following different trajectories when applied to service activities and industries. Techno-assimilation approaches would see service industrialisation as very similar to the industrialisation of manufacturing. The servo-demarcation approach is apparent in many studies of New Service Development, which typically draw attention to features that make this different from New Product Development as applied to goods. Servo-assimilation may apply to approaches such as that of Service-Dominant Logic, which examine the service features of all economic activities (cf. (see, for example, Lusch et al, 2008, Vargo and Lusch 2006). A synthesis approach that can encompass the varied forms of innovation is still recommended, making five approaches in total (one of which is more of an ideal). This will need to go beyond the simplistic classification of industries and activities as manufacturing and services. This means recognising that these grand categories each contains a wide range of heterogeneous products and processes - and we need also to encompass primary sectors and utilities as foci for innovation.

This fivefold framework may be intellectually satisfying, as it enables us to distinguish different currents of thought, and pinpoint their assumptions, advantages, and weak spots. Is it of any practical use, in terms of helping to guide future research and/or management practice, or even policies aimed at promoting service innovation? I would argue that it is bound to be of value to have a better grasp of points of similarity and divergence across different sorts of innovation and innovation process, and to be able to examine not only technological and service elements of innovation, but also how these may combine. This note has been prepared in order to share the logic of the fivefold approach, and hopefully indicate how it can move our mastery of service innovation.

References

Barras, R. (1986), ‘Towards a Theory of Innovation in Services’ Research Policy vol. 15 (4) 161-173.

Barras, R. (1990), ‘Interactive Innovation in Financial and Business Services: the vanguard of the service revolution’, Research Policy, vol.19, pp. 215-237.

Coombs, R. and Miles, I. (2000), “Innovation, measurement and services”, pp. 85-103, in Metcalfe, J.S. and Miles, I. (eds), Innovation Systems in the Service Economy. Measurement and Case Study Analysis. Boston, MA: Kluwer Academic.

Droege, H., Hildebrand, D. & Heras Forcada, M. A. (2009), “Innovation in services: present findings, and future pathways” Journal of Service Management, Vol. 20 No. 2, pp. 131-155.

Gallouj, F. and Weinstein, O. (1997), "Innovation in services", Research Policy vol 26, pp 537-556

Lusch, R.F., Vargo, S., and Wessels, G. (2008), “Toward a Conceptual Foundation for Service Science: Contributions from Service-Dominant Logic” IBM Systems Journal, Vol .47 no.1 pp5-14.

Miles, I. (2016), "Twenty Years of Service Innovation Research" in Toivonen, M. (ed)

Service Innovation: Novel Ways of Creating Value in Actor Systems, (Translational Systems Sciences, Vol. 6) Springer

Vargo, S. and Lusch. R. F. (2006). Service-Dominant Logic: What It Is, What It Is Not, What It Might Be” in Lusch, R.F. and Vargo, S.(eds) , The Service-Dominant Logic of Marketing: Dialog, Debate, and Directions, Armonk, New York: M.E. Sharpe.